CHAPTER 10 CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS
| Jurisdiction | United States |
(Mar 1997)
CORPORATE ENVIRONMENTAL MANAGEMENT SYSTEMS
Harding Lawson Associates
Denver, Colorado
A. General Considerations
A number of factors have to be considered in developing a corporate environmental management program. Laws and regulations covering all aspects of the environmental impacts of business activity continue to be enacted at all levels of government. Simply trying to determine what environmental regulations govern a particular business or industry can be a daunting task.
The cost of complying with applicable environmental requirements can be very significant for mining and other natural resource industries. Meeting air and water quality standards and solid waste disposal restrictions at a large mining operation or industrial facility can entail substantial capital and operating costs. In addition, the staff time and cost of outside contractors to determine applicable requirements, obtain permits, assure compliance through periodic monitoring and reporting, and management oversight can be as great as the cost of pollution control equipment.
All of the major U.S. environmental laws now provide for substantial civil and criminal penalties for violations. For example, the Clean Water Act provides for civil penalties up to $25,000 per day of violation and criminal penalties of up to $50,000 per day of knowing violation of permit conditions or limitations. Negligence or knowing violations by the plant operator or responsible official can result in monetary fines and imprisonment. (33 U.S.C. § 1319). Moreover, the major environmental statutes contain provisions authorizing citizen suits against companies for violating any effluent limitation or compliance order; such suits usually seek an injunction as well as penalties and attorneys fees (e.g., Clean Water Act, 33 U.S.C. § 1365).
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The company subject to an enforcement action or citizens suit will be adversely affected both directly (payment of fines and litigation costs) and indirectly (the negative publicity and attendant loss of business or community good-will). In addition, the violations may trigger a common law tort action by persons claiming health or property damage resulting from the non-complying activity. As set forth in a policy statement issued by the Department of Justice and the federal sentencing guidelines released by the U.S. Sentencing Commission's Advisory Group on Environmental Sanctions, a comprehensive environmental management program can substantially mitigate the extent of a government enforcement action and the imposition of fines and penalties on an organization.
For a company interested in environmental management systems, there are a number of standards or models that can be used to develop and implement such a system. The standard that is currently receiving the most attention, and which appears to be on its way to becoming the dominant model, is ISO 14001 — the Environmental Management System (EMS) Specification Standard. This standard was developed by the International Organization for Standardization (ISO) and became final on September 1, 1996. The ISO 14001 standard is an outgrowth of the ISO 9000 quality standard.
Other models for developing an environmental management system include:
• British Standard (BS) 7750 — the model for ISO 14001.
• The International Council on Metals and the Environment (ICME) Environmental Charter,
• The Global Environmental Management Initiative (GEMI), and
• The International Chamber of Commerce (ICC) Business Charter for Sustainable Development.
The environmental management systems discussed in this paper generally conform with the ISO 14001 standard and the other models referenced above.
Investors and financial institutions are concerned about the environmental performance of a company and are requiring disclosure of environmental violations and litigation before making a decision on whether to invest or make a loan to the company. In responding to requests for
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such information, the company will need to have current data on the compliance status of all operations.
In order to effectively deal with environmental issues, a company must have an environmental management system or program that satisfies the internal needs of the organization for assuring compliance with all applicable environmental laws and that meets the external reporting requirements and requests for information by the public and investors. An environmental management program must be tailored to the needs and resources of the company and must be flexible to accommodate changes in the organization and legal requirements.
B. Goals of the Environmental Management Program
The basic goals and objectives of an environmental management program must be defined at the outset. Objectives to be considered include achieving and maintaining compliance with applicable environmental regulations, minimizing pollution treatment and disposal costs, managing wastes from operations so as to avoid long-term liability under CERCLA and similar statutes, integrating an environmental ethic into all levels of the organization, and positioning the company to be proactive rather than reactive on environmental issues. The emphasis in environmental protection is shifting from pollution control to pollution prevention; therefore, the corporate environmental management program should also have as a goal preventing pollution and minimizing waste to the extent feasible.
C. Elements and Design of the Environmental Management Program
The following comprise the general elements of a corporate environmental management program:
1. An environmental policy statement signed by the chief executive officer.
2. An environmental management structure and information system that meet the needs of the organization.
3. Periodic environmental audits of all company operations.
4. A program for educating and training employees on environmental issues.
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5. Comprehensive reporting procedures, both internal to the organization and external to government agencies that must be notified with respect to environmental compliance (and non-compliance) of company operations.
6. A record keeping and retention policy that covers environmental records.
7. A pollution prevention program, including waste minimization and materials recycling.
8. Part of an effective environmental management system is a public and governmental relations program.
All of these elements of a corporate environmental management program will be discussed in more detail below.
The specific aspects of an environmental management program will depend on the size and type of organization. The needs of a small company with one or two operations will be substantially different from the needs of a large company with a number of varied operations. A privately held company does not have the same reporting and disclosure obligations of a publicly traded company. Likewise an environmental program for a partnership engaged in a particular business will be more limited than a program for a publicly traded company operating a number of different businesses. The nature of the business or industry will determine to a large degree the scope and content of the environmental management program (e.g., the environmental issues faced by a mining company with several large metal mines and smelters are quite distinct from the environmental concerns of a small consumer products manufacturing company). The company's goals and objectives for the environmental management program will also influence the nature of the program and resources committed for environmental compliance.
At a minimum, the environmental management program must be tailored to meet the needs of the organization and regulatory requirements. In a small to medium sized company, a manager or director of environmental affairs should be appointed and he should report directly to the chief executive of the company. Each operation with potential environmental impacts should have a person designated to be responsible for environmental matters who reports to the manager of the operation, with a dotted line reporting relationship to the corporate manager of environmental affairs. For operations with limited environmental impacts, the environmental staff will likely have other responsibilities, such as health and safety or plant engineer. Even in a relatively small company, the manager of environmental affairs should not have several other responsibilities, with the exception of occupational health and safety.
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For larger companies with operations in different jurisdictions, responsibility for environmental management and compliance should be delegated to a vice president, or a director of environmental affairs who reports to a vice president or the president of the company. Each of the company's major operations should have an environmental engineer or manager who is responsible for environmental matters and who reports to the manager of the operation. The operation's environmental manager should have a dotted line reporting relationship to the vice president or corporate director of environmental affairs. The corporate vice president or environmental affairs director should have adequate staff to not only oversee corporate compliance but also provide support and assistance to the operations as needed.
In a company where environmental issues are a major concern and may result in significant liability if not properly managed, the company should consider having the board of directors establish an environmental committee that will oversee environmental performance and provide general policy and direction for the environmental management program. Having a committee of the board of directors review the overall environmental performance of the company demonstrates a serious commitment to achieving...
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